Why So Many Hip-Hop Producers Are Putting Business Before Beats

“If y’all knew the amount of f–king money I give up just to make sure a song comes out, ’cause people are so f–king stingy, you would not believe it.”

These are the words of Kenny Beats—a producer who has worked with rappers like Rico Nasty, Key!, and Freddie Gibbs—as cemented in a fiery 15-second video that the producer uploaded to Twitter from his car recently. But if we’re being realistic about the harsh demands of hip-hop’s loose, rapid-fire release culture and haphazard record-keeping that comes along with it, Kenny Beats’ words may as well have come from any other producer in the genre.

Going back as early as when budding rappers and entrepreneurs were selling cassette tapes and CDs from the trunks of their cars, fast money from moving physical product has taken precedence over long-term revenue from royalties that said artists might never see. Of course, the industry landscape is much different today; fans are effectively renting access to music via streaming services like Spotify and Apple Music, previously unprofitable catalog now has a longer lifespan, and rappers are coming out on top.

According to the latest HITS Daily Double Song Revenue Chart, the top 20 rap songs are generating nearly $1.8 million in streaming revenue in a single week. Label bidding wars are heating up as a result, with record deals ranging from $1 million for Lil Xan to a reported $15 million for BROCKHAMPTON. But producers, who are often forced to stay behind the scenes both culturally and financially, are still paying the price—and speaking up about it.

Last year, “Pull Up Wit Ah Stick” producer Lil Voe revealed that Warner Bros. Records sent him a mere work-for-hire contract for the song, and took all his publishing and wiped his official credit from the track in the process. Atlanta producer DJ Burn One then confirmed that he never got paid for producing two tracks on A$AP Rocky’s 2011 debut mixtape LIVELOVEA$AP, which the rapper is still monetizing and currently performing for global audiences on tour.

“You can blame the business and say it’s dirty—which it is—or you can put one foot forward at a time, hire a lawyer to look over your contracts, arm yourself with knowledge, and help others in your arena,” says Burn One, who is currently forming a nonprofit organization called Fast Forward United to educate and empower producers with business resources. “I think it starts with baby steps.”

Recorded music might be the only type of product that one can release and distribute at global scale without being able to verify who the owners are. Unlike with film and TV, music data is much more fragmented and siloed across multiple sources, including but not limited to labels, publishers, performing rights organizations (PROs), and recording studios.

“The way many of these companies are trying to match and verify their data? Hundreds of emails,” says Dae Bogan, founder and CEO of TuneRegistry, a rights management platform for indie artists. “Many labels are still using old software and systems to manage their digital catalog, and their rights department is different from the one responsible for metadata, which is different from the one responsible for collecting royalties. There’s a lot of bureaucracy involved.”

On the corporate level, inaccuracy around ownership leaves billions of dollars on the table. Spotify has faced two copyright infringementlawsuits over the past three years, adding up to $1.75 billion, for allegedly failing to secure the necessary licenses for certain songs. An estimated $2.5 billion is currently sitting in pools of “black box” royalties, some of which are collected when streaming platforms are unable to identify who owns a song.

While who exactly is “responsible” for this problem remains an open debate, one indisputable fact is that artists and producers aren’t capturing as much ownership information during the creative process as they used to. Even the phrase “at the source” itself has diluted in meaning, as collaborators are increasingly recording verses in hotels or bedrooms while on tour on opposite hemispheres of the world, rather than together in the same studio.

“Producers need to take initiative in the studio from the beginning and say, ‘I think what I’ve added has X value to this project,’” says Deborah Mannis-Gardner, owner and president of DMG Clearances, which has handled global music rights clearances for clients like DJ Khaled and Eminem. “The problem is that once you have six to eight writers or producers on a track, everyone has their own opinion on what percentage everyone gets. I don’t think people are being intentionally combative, but it’s hard to get that many people on the same page.”

In addition, remote work norms often put indie artists at a disadvantage in contract negotiations. “If you’re an indie producer working with a major label and not everyone’s in the same room to sign a split sheet, you don’t have a lot of leverage,” adds DJ and artist manager Adam Golden, who manages emerging producer Yung Skrrt. “Labels will get the sound they want, regardless of whether the original producer is willing to cooperate with them.”

As a result, securing the proper credits for songs is often retroactive, even at the major-label level. Lawyer sources say that many major rap albums, including Drake’s Scorpion and Migos’ Culture II, are still securing the proper clearances weeks or even months after release.

The credits problem is also arguably a chicken-or-egg dilemma with respect to producers’ business models. Industry sources say that producers today can command four- to six-figure upfront checks per track. At those rates, producing even just three songs a month can already lead to substantial annual income, to the point where said producers might not necessarily be prioritizing proper credits or metadata.

That said, “if you’re getting an advance, you should also be getting a contract with details about how many points, mechanical royalties and other basics you’re getting on the backend off the song,” says Burn One. “If someone tells me they have an advance but no royalties, that’s telling me they didn’t get the proper deal in place.”

Given the amount of money at stake, building a solution for these enduring issues around credits is potentially big business—and a growing number of music-tech companies are jumping on the opportunity. In April 2018, Spotify acquired Loudr, a startup using machine learning to streamline licensing and royalty payments. Later in August 2018, City National Bank, which has several high-profile clients in Hollywood, acquired Exactuals, which similarly trains algorithms to match ownership data across disparate sources to ensure the proper rights owners are paid.

Both Spotify and YouTube have also added sections for songwriter and producer credits to their platforms. The one big catch: because they’re still ingesting these credits primarily from labels, much of the output is still incomplete or erroneous for now—a classic case of “garbage in, garbage out.”

There is also a burgeoning, if not overcrowded, startup ecosystem around credits: at-the-source solutions like Auddly and Sound Credit, publicly-searchable databases like Jaxsta, and even a handful of blockchain-based initiatives like JAAK and DotBC. While each of these startups is tackling a different, necessary piece of the gargantuan credits puzzle, there’s a lot of politics involved in positioning a new startup to labels as an authoritative data source—and a given major label cannot realistically work with all of these startups at once.

Amidst this complex tech landscape, many producers are realizing that the solution they can control most directly is simply elevating the value of their own brand. A-listers like DJ Khaled and Benny Blanco are no longer relying solely on advances or residual royalties for income, but are also tapping into other revenue streams such as merchandise, brand endorsements, and even touring, altering public perception of producers in the process. The underlying argument is that producers are no longer just “secret weapons” for artists, but are also creative leaders and backbones for hip-hop culture that deserve the proper value and recognition.

“A lot of us think putting business first taints the energy of the music, but now I think business is what allows the music to flow,” says Burn One. “You just need to protect your interests, learn your rights and negotiate what you’re worth. The moment you take your eye off the ball, someone else will take the ball from you.”